Gap funding.

The problem it solves

Your senior lender funds a percentage — of purchase price, of cost, of after-repair value. Whatever they do not fund, you cover. Gap funding is money that fills part of that remainder so a viable deal is not lost purely for want of cash at closing.

Be clear-eyed about the cost

Gap capital sits behind the senior loan. If the deal fails, the senior lender is repaid first and the gap provider absorbs losses before the first lienholder does. That subordinate position is priced accordingly, and it should be.

Before you take it

• Check your senior loan documents. Many prohibit subordinate financing outright. Taking it anyway can be a default.
• Model the deal with the gap cost included — not the version without it.
• Know the payoff order and confirm the exit still clears both positions with room left.
• Get the intercreditor terms in writing before closing, not after.

Why this page exists

Search for gap funding and much of what comes back is either unrelated government grant programmes or thinly disguised advance-fee schemes. If anyone asks you for money up front to arrange funding, that is your answer. We never charge an upfront fee.